Source: Wall Street See
JPMorgan stated that investors' interest in Japanese stocks is increasing, and the profit forecast for Japanese companies is trending upwards. The correlation between the weakening of the Japanese yen and the rise of Japanese stocks is returning.
Is it the start of a new upward trend in the Japanese stock market?
Last Thursday saw a historic moment for the Japanese stock market, with the Nikkei 225 index and the TOPIX index closing at 40,913.65 and 2,989.47 points respectively, reaching their highest levels in 34 years.
According to a report from JPMorgan on July 5th, since hitting bottom on June 17th, the Japanese stock market has broken out of its previous consolidation range and is exhibiting a new upward trend. It is expected that the Japanese stock market will begin a new upward cycle.
JPMorgan pointed out three positive factors:
First, investors' interest in the Japanese stock market is increasing, and the outflow of funds from major ETFs has stopped.
Second, the revision trend of corporate profit forecasts has turned upward, and improvements in economic indicators are being reflected in the index reversal.
Furthermore, although the yen has continued to weaken, considering the prospect of normalization of the Bank of Japan's monetary policy, the downward pressure on the yen has eased, and the correlation between the weakening yen and the rising stock market is being restored.
Meanwhile, JPMorgan also said:
The rise of the Japanese stock market is not driven by just a few stocks; the range of stocks that are rising is expanding, including semiconductor-related stocks, finance, wholesale, autos, machinery, and other industries.
The rise of the Japanese stock market to some extent benefits from structural changes, including efforts by companies to improve their capital efficiency in response to governance reforms, changes in the transmission of rising costs in response to wage increases, and strengthening corporate investment willingness.
Furthermore, JPMorgan predicts that if the current upward trend continues, large cap stocks will benefit first from overseas investors' inflows, followed by a rotation to middle cap stocks.
Editor/Lambor